SYDNEY Feb 6 China steel and iron ore futures
retreated further on Monday despite positive signs of growth in
the country's services and manufacturing sectors, with investors
digesting last week's unexpected rise in short-term interest
While the hikes by the central bank were modest, they
reinforced views that Beijing is intent on containing capital
outflows and reining in risks to the financial system created by
years of debt-fuelled stimulus.
"Adding to the negativity around Beijing's response to the
financial markets, steel inventories rose between the start and
end of the Lunar New Year and there are high inventories of iron
ore at the ports, so investors are reluctant to keep buying," a
trader in Shanghai said on condition of anonymity.
The most active rebar on the Shanghai Futures Exchange
closed the morning session 2.55-percent lower at 3,093
yuan ($451). On Friday, the contract lost 6.8 percent.
Iron ore on the Dalian Commodity Exchange dropped
3 percent to 607.5 yuan, after losing 5.4 percent on Friday.
The trader added that although markets reopened on Friday
from the week-long Lunar New Year holiday, most investors were
only just "getting their feet back in the markets".
Countering negative sentiment around the hikes, growth in
China's services sector remained strong in January and prompted
companies to hire staff at the fastest pace in 20 months.
The strong reading mirrored improvements in manufacturing
surveys last week, giving China's policymakers more room to
focus on containing the financial risks from a sharp rise in
Elsewhere, shipping interruptions caused by stormy weather
cut iron ore shipments to China from Australia's Port Hedland
terminal in January by 7.8 percent from a month ago.
The port, used by BHP Billiton and Fortescue Metals
Group, saw exports to China slip to 34.5 million tonnes
from 37.4 million tonnes in December, after a tropical low swept
across the Pilbara iron ore district on Jan. 27, triggering an
emergency clearing of vessels for just under 18
($1 = 6.8560 Chinese yuan renminbi)
(Reporting by James Regan; Editing by Joseph Radford)